In the recent­ly released Notice 2013–14, the IRS pro­vid­ed a bit of relief for employ­ers who wish to take advan­tage of the Work Oppor­tu­ni­ty Tax Cred­it (WOTC), which was retroac­tive­ly extend­ed by the Amer­i­can Tax­pay­er Relief Act of 2012 (ATRA). Employ­ers now have until April 29, 2013, to file the qual­i­fied employ­ee cer­ti­fi­ca­tion form with their state employ­ment secu­ri­ty agency (des­ig­nat­ed local agency, or DLA).

Back­ground

The WOTC offers tax cred­its of $1,200 to $9,600 to orga­ni­za­tions that hire employ­ees from cer­tain tar­get groups, which have been iden­ti­fied to help improve their eco­nom­ic sit­u­a­tion. Through the years, such groups have includ­ed vet­er­ans, youths, and indi­vid­u­als liv­ing in cer­tain areas, among oth­ers. In 2012, the cred­it applied only for the hire of qual­i­fied vet­er­ans, and that pro­vi­sion expired on Decem­ber 31, 2012.

ATRA extend­ed the WOTC through the end of 2013 for tax­able employ­ers hir­ing indi­vid­u­als in groups defined in Sec­tion 51(d)(1) through (d)(10) of the Inter­nal Rev­enue Code, includ­ing qual­i­fied vet­er­ans. The pro­vi­sion applies retroac­tive­ly for tar­get groups that were not orig­i­nal­ly cov­ered in 2012 (i.e., non-vet­er­an groups), includ­ing indi­vid­u­als age 18 to 39 who have received food stamps for a cer­tain peri­od of time pri­or to the hire date, indi­vid­u­als age 18 to 39 liv­ing in fed­er­al­ly des­ig­nat­ed Rur­al Renew­al Coun­ties or Empow­er­ment Zones, and ex-felons, among oth­ers. Note that for tax-exempt employ­ers, the 2013 exten­sion applies only to new­ly hired qual­i­fied vet­er­ans.

In order to claim the cred­it, employ­ers must receive a cer­ti­fi­ca­tion from their DLA that the indi­vid­ual is indeed a mem­ber of a qual­i­fied group. To receive the cer­ti­fi­ca­tion, Form 8850, the “Pre-Screen­ing Notice and Cer­ti­fi­ca­tion Request for the Work Oppor­tu­ni­ty Cred­it,” must typ­i­cal­ly be com­plet­ed and sub­mit­ted to the DLA with­in 28 days of the new hire’s first day on the job.

Wel­come relief, but unan­swered ques­tion

After the wel­come exten­sion was grant­ed as part of ATRA, one impor­tant ques­tion remained: How does an employ­er meet the 28-day cer­ti­fi­ca­tion require­ments for new hires brought on board in 2012? IRS Notice 2013–14 cleared up the con­fu­sion. The notice states that for all indi­vid­u­als in the non-vet­er­an tar­get groups hired between Jan­u­ary 1, 2012, and March 31, 2013, and for qual­i­fied vet­er­ans hired between Jan­u­ary 1, 2013, and March 31, 2013, employ­ers now have until April 29, 2013, to sub­mit Form 8850. After April 29, the 28-day rule will be rein­stat­ed.

Employ­ers with ques­tions about the WOTC should speak with their tax advi­sors.